Healy Plumbing & Heating Co. v. Mpls.-St. Paul Sanitary Dist., MINNEAPOLIS-SAINT

• Citation: 169 N.W.2d 50,284 Minn. 8
• Decision Date: 13 June 1969
• Docket Number: MINNEAPOLIS-SAINT,No. 41513,41513
• Parties: HEALY PLUMBING AND HEATING COMPANY, Appellant, v.PAUL SANITARY DISTRICT et al., Respondents.
• Court: Supreme Court of Minnesota (US)

Page 50

169 N.W.2d 50

284 Minn. 8

HEALY PLUMBING AND HEATING COMPANY, Appellant, v. MINNEAPOLIS-SAINT PAUL SANITARY DISTRICT et al Respondents.

No. 41513.

Supreme Court of Minnesota.

June 13, 1969.

Syllabus by the Court

Minn.St. 445.15, relating to contracts let by the Minneapolis-St. Paul Sanitary District, requires a bond to be given by contractors for any works of construction as provided in and subject to the provisions of §§ 574.26 to 574.31. Such bond is given for the protection of the state or subdivision thereof and, more particularly here, for the Minneapolis-St. Paul Sanitary District for the use of the obligee and all persons doing work or furnishing skill, tools, machinery, materials, insurance premiums, or equipment or supplies for any camp maintained for the feeding or keeping of men and animals engaged under, or for the purpose of, such contract. No action lies against the surety of such bond by anyone not included within the statutory purposes for which the bond is given. The action of plaintiff does not come within such purposes, and as a result the court correctly granted summary judgment in favor of the surety thereon.

Maun, Hazel, Green, Hayes, Simon & Aretz, and James W. Brehl, St. Paul, for appellant.

Thomas, King, Swenson & Collatz, St. Paul, for Travelers Ind. Co.

Briggs & Morgan, St. Paul, for Steenberg Const. Co.

Carlsen, Greiner & Law, Minneapolis, for Watson Const. Co. and Planet Ins. Co.

Faricy & Green, St. Paul, for Minneapolis-St. Paul Sanitary Dist.

Carroll, Cronan, Roth & Austin, Minneapolis, for Toltz, King, Duvall, Anderson & Assoc.

OPINION

KNUTSON, Chief Justice.

This is an appeal by plaintiff, Healy Plumbing and Heating Company (hereinafter Healy), from the judgment entered pursuant to an order of the district court granting the motion of defendant Travelers Indemnity Company (hereinafter Travelers) for summary judgment.

The Minneapolis-St. Paul Sanitary District was created and exists under and by virtue of Minn.St. c. 445. Section 445.15 provides in part:

'Bonds shall be required from contractors for any works of construction as provided in and subject to all the provisions of sections 574.26 to 574.31.'

Section 574.26, so far as material, reads:

'No contract with the state, or with any municipal corporation or other public board or body thereof, for the doing of any public work, shall be valid for any purpose, unless the contractor shall give bond to the state or other body contracted with, for the use of the obligee and of all persons doing work or furnishing skill, tools, machinery, or materials or insurance premiums or equipment or supplies for any camp maintained for the feeding or keeping of men and animals engaged under, or for the purpose of, such contract, conditioned for the payment, as they become due, of all just claims for such work, tools, machinery, skill, materials, insurance premiums, equipment, and supplies for the completion of the contract in accordance with its terms, for saving the obligee harmless from all costs and charges that may accrue on account of the doing of the work specified, and for the enforcing of the terms of the bond if action is brought on the bond, including reasonable attorney's fees, in any case where such action is successfully maintained and for the compliance with the laws appertaining thereto.'

In 1964 the Sanitary District let three contracts for the expansion of the St. Paul Sewage Treatment Plant. Defendant Steenberg Construction Company, Inc., (hereinafter Steenberg) contracted to construct settling tanks and related structures adjacent to a new compressor building which was to be built under contract let to defendant Watson Construction Company, Inc., (hereinafter Watson). Healy was to do the mechanical work in the compressor building. Each contract was a separate agreement between the contractor and the Sanitary District. The contracts provided that the contractors should furnish workmen's compensation insurance, comprehensive public liability and property damage insurance, and a bond pursuant to §§ 574.26 to 574.31. Travelers was the surety on the bond furnished by Steenberg pursuant to these statutory provisions. Among other things, the bond provides that it is executed for the use of the Sanitary District 'and the use of all persons and corporations doing work or furnishing skill, tools, machinery, materials, insurance premiums, equipment or supplies for the purpose of the Contract hereinafter mentioned, its heirs, executors, administrators, successors or assigns.' In the conditions of the obligation we find a statement that the bond is issued pursuant to the contract entered into with Steenberg--

'* * * and in accordance with the provisions of Section 360.122 (sic--all parties agree this should have been § 455.15) and 574.26, Minnesota Statutes 1953, * * * for the use of said Minneapolis-Saint Paul Sanitary District and all others mentioned in said Section 574.26, conditioned as by said statute and as herein required.

'NOW THEREFORE, if the principal shall faithfully fulfill and perform said contract * * * and if said principal shall pay as they become due all just claims for such work, tools, machinery, skill, materials, bond and insurance premiums, equipment and supplies required to be paid by the principal for the completion of said contract in accordance with its terms, * * * and save the Sanitary District and said Cities harmless therefrom and shall perform and indemnify in all particulars as said Contract and the Specifications made a part thereof shall prescribe, and shall comply with all laws and ordinances, orders and decrees appertaining to any of said matters then this obligation shall be void; but otherwise it shall remain in full force and effect.'

During the progress of the work the Mississippi River overflowed its banks and caused damage to the work being done by Healy and delay in the completion thereof. Healy brought this action against the Sanitary District, the architects, Watson, Steenberg, Travelers as surety on Steenberg's bond, and Planet Insurance Company as surety on Watson's bond to recover the expenses incurred in preparing for the 1965 flood; the cost of repairing the damage to its works and equipment; and damages due to delay and interference with the performance of the Healy contract, on the theory that it was Steenberg's duty to protect the work from the rising waters of the river. In its complaint, Healy based its claim on two counts: First, it alleged that Steenberg and Watson were required by their contracts with the Sanitary District to protect their work and that of others adjacent to them, including that of Healy, from damages due to the rising river water; and second, it alleged negligent failure on the part of Steenberg and Watson to provide such protection.

The parties entered into a stipulation which reads:

'IT IS HEREBY STIPULATED AND AGREED, by and between the above-named plaintiff and defendant Travelers Indemnity Company, through their respective attorneys, that for the purposes of a trial of this case and in the consideration by the Court of any pretrial motions or proceedings, the following facts are true:

'A. That the plaintiff furnished no labor or materials to defendant Steenberg Construction Company, Inc. for use in the doing of work or furnishing of materials described in the technical provisions and drawings of the plans and specifications applicable to the contract of the defendant Steenberg Construction Company, Inc. with defendant Minneapolis-St. Paul Sanitary District, No. 636, referred to in Paragraph II of the Complaint, provided that plaintiff expressly reserves its position that defendant Steneberg (sic) was obliged under its said contract to protect its work and the property and work adjacent thereto and was responsible for damage to the property and work of plaintiff due to the flooding of defendant Steenberg's work and Steenberg's failure to furnish said protection.

'B. That the claims asserted in the Complaint against defendant Steenberg Construction Company, Inc. and defendant Travelers Indemnity Company are for labor and materials performed and furnished by plaintiff in the protection of its own contract work and site prior to the impending flood referred to in the Complaint, and in the repair of the damage to its contract work and site after said flood.'

Based on this stipulation and upon an affidavit of Steenberg's president to the effect that it had taken out the insurance required by the contract and that Healy had furnished no materials, tools, equipment, work, or labor in the performance of Steenberg's contract, together with a deposition of an officer of Healy, the court granted summary judgment in favor of Travelers against Healy.

These two issues are presented on this appeal: Whether Travelers is liable to Healy for the alleged breach of Steenberg's contract; and whether summary judgment was proper.

If Healy has no cause of action under the bond, it follows that summary judgment should have been granted.

At the outset, it should be kept in mind that this appeal does not involve the right of Healy to recover from Steenberg or Watson for failure to protect its work from flood water, but involves only Healy's right to recover from Travelers as surety on the bond given pursuant to § 574.26. It is axiomatic that Travelers' liability is limited to the obligation it assumed under its bond. The case of La Mourea v. Rhude, 209 Minn. 53, 295 N.W. 304, relied upon by Healy, is of no help to it for the reason that that action was brought against a contractor, not against the surety on a bond given under our statute. Similarly, Michaud v. Erickson, 108 Minn. 356, 122 N.W. 324, and Northern Nat. Bank v. Northern Minn. Nat. Bank, 244 Minn. 202, 70 N.W.2d 118, do not involve the liability of the surety on a bond required by § 574.26. The Michaud case involved the right of third persons to recover under a performance bond...